Insurance Information Institute: U.S. Auto Insurer Claim Payouts Soar Due to Increasing Inflation
"For personal auto liability insurance, increasing inflation drove loss and DCC (defense containment costs) higher by
Liability insurance covers what the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person, or persons. Every
The study was researched and written by
Economic inflation is measured in the study as the Consumer Price Index (CPI) - All Urban metric, a
"The business of personal auto liability insurance is also many times larger than commercial auto. Personal auto liability had
Supported by detailed analyses of claims payouts dating back years, the study concluded that, for personal auto liability insurers:
* Losses have been growing faster than premiums in recent years
* Since Accident Year 2020, standardized losses rose 15 percent while standardized premium fell 13 percent
* Severity, the size of losses, increased dramatically after 2019
The study concluded that commercial auto liability insurers saw:
* Losses grow faster than the overall economy
* Social inflation as a primary influence on these losses prior to 2021
* The average size of loss--claim severity--increase dramatically since 2020
"For both personal and commercial auto liability lines, social inflation was the main source of increasing inflation before 2021. For 2021 and later, increasing inflation came from a combination of economic inflation and social inflation," the study said.
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Original text here: https://www.iii.org/press-release/us-auto-insurer-claim-payouts-soar-due-to-increasing-inflation-092823
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